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Recent Trends in Market Shares of Leading Exporters in GCC Countries

This study examines the recent market shares of the US, European, and Asian countries in GCC countries. It explores the economic and non-economic determinants of these market shares, including cost, quality, national reputation, market power, bilateral trade agreements, diplomatic relations, trade leverage, and popular sentiments. Statistical analysis and regression models are used to analyze the impact of these factors on market shares. The study also highlights the sensitivity of Arab import markets to diplomatic relations, with evidence from historical events such as the liberation of Kuwait and the September 11 attacks.

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Recent Trends in Market Shares of Leading Exporters in GCC Countries

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  1. GCC Trade Patterns:Market Shares of Leading Exporters in GCC Imports of Manufactured Goods and Machinery Nader Habibi Crown Center for Middle East Studies Brandeis University

  2. Growing Significance of the Arab Import Market

  3. Key Topics & Questions • 1) Recent trends in market shares of the US, European and Asian countries in GCC countries • 2) Determinants of market shares in GCC Countries (Economic and Non-economic factors.)

  4. Economic Factors • Cost • (Made in China = Cost Effective, Inexpensive) • Quality • National Reputation (Made in Japan=Quality) • Market Power • Commercial Aircraft Market, Supercomputers USA, Germany, Japan • Bilateral Trade Agreements

  5. The US trade policy towards Middle East (Arab countries)

  6. Role of non-economic factors in Market share • Diplomatic relations • Trade leverage (Use of trade to promote non-economic goals) • Popular sentiments about an exporting country’s image

  7. EU4=UK + Germany + France + Italy

  8. Market shares as shares of the total exports of USA, EU4 and Asia4

  9. Market shares as shares of the total exports of USA, EU4 and Asia4

  10. Statistical AnalysisImpact of non-economic factors • Importing Countries : • Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, UAE, GCC, • Arab= (GCC+ Morocco, Libya, Egypt, Tunisia, Algeria, Syria, Jordan) • Exporting Countries: -France, Germany, Italy, the UK, (EU4= FRA+GER+ITA+UK) -China, India, Japan, Korea , (Asia4 = CHN+IND+JPN+KOR) -USA Data: UN COMTRADE: Import-Export data (US$) 1969-2008

  11. Seemingly Unrelated Regressions(aggregated model) • A three-equation SUR model for each importing country (One equation for each export partner) 1)Asia4 (China, Japan, India, Korea) 2)EU4 (UK, France, Germany, Italy) 3)USA

  12. Strong conclusion: US gained market share after liberation of Kuwait.Week Conclusion: US lost market share after Sept. 11 and invasion of Iraq.

  13. End

  14. Determinants of market shares: Competitive Price, Diplomatic Relations, National Image • Economists: Economic forces and relative prices matter most (Cost, quality,..) • Political Scientists: Diplomatic relations and strategic considerations are equally important. (Culture, diplomatic relations, attitude,..) • Relative weight of these factors for Arab importers?

  15. Evidence on role of non-economic factors • Summary(1989):The volume of US trade is sensitive to political factors and it trades more with countries that are considered more (politically) friendly . • Dixon W.J. and Moon B.E. (1993) “Goods are differentiated by the nation of origin and demand for them is substantially influenced by the relations between nations” p.22

  16. North Korea’s Imports from China and Former Soviet Union • Lim &Kim (2002) • Korea’s diplomatic relations with two communist rivals affected their relative market share in some basic commodities such as fuels. • Aggregate imports were insensitive to political factors.

  17. Impact of Diplomacy on Trade: Evidence • James M Lutz (1995) Eastern European countries followed the lead of Soviet Union in trading with Developing Countries (Correlation analysis) When USSR expanded trade with a developing country the Eastern European countries followed with a one year lag.

  18. Impact of Diplomacy on Trade: Example in the Arab World

  19. Market shares of four European countries in Arab Countries (3-year averages of annual market shares) Source: Nominal Import Data from UN Comtrade; b) The Arab countries in this analysis are : GCC countries, Morocco, Libya, Egypt, Tunisia, Algeria, Syria, JordanData reflects the aggregate market shares of United Kingdom, France, Italy and Germany

  20. Results based on Three-equation SUR models

  21. Based on 6-equation SUR (USA,EU4,China,Japan, Korea and India) for each importing country/region

  22. Question: Are Arab import markets sensitive to diplomatic relations? • Intifada, September 11 and invasion of Iraq led to a loss of market share for the United States in Saudi Arabia and in the aggregate imports of Arab countries (No conclusive result for other Arab countries. ) • Although the US and European powers both participated in liberation of Kuwait, the corresponding period (1991-92) is associated with higher market share for the US only. • Asian exporters (China in particular) have steadily increased their market share in Arab countries since 2001. • Appreciation of euro against dollar has not benefited the US. It has benefited China.

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